The KDM Dairy Report 11/19/2022


The market is cooling down after last weeks jump.  With barrels back under $2.  Blocks did move higher but did not have any trades this week and therefore, it is hard to say if there is much support if the sellers step back in.

Weekly Spot Prices
Weekly Future Prices

Cheese: In the Northeast and West, increasing milk production is enabling cheesemakers to run busy production schedules, though some cite labor shortages and supply chain delays as limiting their ability to operate full production schedules. Contacts in the Midwest say they are running nearly full or full production schedules, amid steady milk production. Some contacts in the region say they expect milk availability and pricing will remain somewhat stable throughout Thanksgiving week. Demand for cheese is generally steady in the Midwest. Food service demand is strengthening in the Northeast and West, though this is contrasted by softening retail demand in these regions. In the Northeast and West, export sales of cheese are strong. Some Western contacts say favorable prices for domestically produced cheese are contributing to current demand. Contacts in the Northeast and West say spot cheese inventories are tightening. Meanwhile in the Midwest, loads of process cheese have become available in recent weeks.  (USDA Cheese Highlights)

Butter: In the Central and West regions, cream is becoming more available and butter makers are running busier production schedules. Contacts in these regions say cream multiples are edging lower, though some in the Central region suggest cream availability may tighten following next week’s holiday. In the East, butter makers are utilizing volumes of cream to make more butter than they have in previous years. Demand for butter is steady in the Central region. Demand for retail butter is strong in the Northeast, while food service demand is unchanged. Some contacts in the West say retail sales are trending higher as grocers are purchasing for end of year holidays. Butter inventories are down compared to previous years and some Northeast stakeholders report they are purchasing loads from other regions to meet current market needs. In the West, butter is available, but spot purchasers report inventories are tightening. Central region butter makers say butter is available but loads for sale are all newer production. Bulk butter overages range from 5 to 18 cents above market, across all regions.  (USDA Butter Highlights)

Dry whey: Dry whey prices are unchanged on the mostly series and bottom of the price range, but there were some brand-preferred trades that pushed the top of the range higher this week. Spot trading activity was busy this week, as a lot of reported trades are taking place where they have been for the past few weeks, in the low/mid $.40s. When gyms and gym-adjacent shops were closed during the early months of the COVID pandemic in 2020, the high-protein complex was one of the most bearishly impacted markets. Subsequently, when those markets started returning, they returned with a fierceness. The 2022 third and fourth quarters have brought along some market bears to those complexes for the first time since their original run-up, so now contacts suggest growth in drying sweet whey powder and whey availability is occurring. Animal feed whey offers were reported at closer to $.40, but purchases remain in the low/mid $.30s. Whey market tones are in search of direction.  (USDA Dry Whey updates)

Consumer demand has been in weighing on the markets for the last few weeks.  We saw an uptick on prices last we with the announcement of Government buying but that new has started to fade.  This week the markets have again started to fade as worry grows for economic slow down.  Looking at the weekly cold storage numbers from the above table, looks like demand for dairy is strong as we go into the holiday season.  This does not show the whole picture but if cold storage numbers are getting smaller it is a good indication that demand is good.  There will be no report next week.  We wish all a happy and safe Thanksgiving holiday Week.